Technology, culture shift aid in optimizing hotel profits

NATIONAL REPORT—Meetings and groups are a critical component of the hotel business mix, but it’s not enough to just get groups in the door. Equally important, hotels must make sure their pricing is optimized so that money isn’t being left on the table. As technology—and the field of revenue management—has become more sophisticated, hoteliers are adopting a new, more dynamic approach to their selling strategy.

One of the main challenges that the hotel industry has faced when it came to group business was the lack of proper tools. “Historically, one of the biggest challenges that hoteliers face is a lack of technology that provides insight and data to confidently make strategic decisions for meetings and events,” said Heather Hart, director, Smart Space by IDeaS. “For a long time, much of this process has been manual.” This means that many hoteliers have historically had separate record keeping and booking systems. “This not only creates more manual processes but also a lack of communication across teams,” Hart said.

“Hoteliers should treat meetings and events space similar to how they treat guestroom space—by applying a data-driven strategy.”—Heather HartSmart Space by IDeaS

Another issue? “Hoteliers often sacrifice function space in order to fill bedrooms, without having the insight into the total demand and value of their event facilities,” Hart said. “It’s not always the first or biggest, but it’s more important to understand which group or catering inquiries stand to be the most profitable.”

The consequences of getting a hotel’s meeting and events business strategy wrong are many: missed opportunities for maximizing use of space and generating optimal profit; failure to fill event space at the right price, right time and right capacity; separate teams without a cohesive approach to the group and catering business; and a disconnect between revenue management, sales and meetings and events teams.

“In recent years, technology has helped hoteliers adapt, and apply a more strategic approach to selling guestrooms. Now, hoteliers can apply a more profitable strategy to the function space side of hotels thanks to new technological advancements,” Hart explained. “With new technology, including dynamic pricing tools, hoteliers are more confident in forecasting meetings and events demand, which leads to improved displacement analysis and optimal pricing of meeting space.”

“Smart Space by IDeaS creates a firm connection between revenue managers and event sales managers by providing visibility into meetings and events demand in a powerful web-based tool,” Hart said. “It seamlessly pulls data from other sales and catering tools to help strategically manage meetings and events inquiries and bookings. It provides excellent trend data, space utilization statistics, conversion ratios, and a variety of tools that allow hoteliers to collaborate and create ideal pricing scenarios for group and catering business.”

Hart noted that using technology in this way benefits hoteliers in many ways. “This technology continues to bridge the roles of revenue management, sales, meetings and events, and marketing, signaling the growing need for technology solution providers to equip hotels with a more holistic approach to a combined sales and revenue management strategy,” she said. “This will create a more balanced approach to selling guestrooms and function space to increase profit.”

This more balanced approach also requires a shift in how hotels strategize when it comes to selling. “Hoteliers should treat meetings and events space similar to how they treat guestroom space—by applying a data-driven strategy,” Hart said. “They can’t always assume the first piece of business is the most profitable piece of business, or that function space is only secondary to fill guestrooms.”

One trend that will aid hoteliers to change their strategy is the shift toward a more collaborative culture. “We’re seeing the rise of a revenue management culture throughout the hotel,” Hart continued. “Event managers, sales and other roles in the hotel have worked closer than ever with revenue managers and revenue management tools in order to drive adoption of a total revenue management culture to maximize total hotel profit performance.”

Looking toward the future, Hart noted, “I think more hotels will be forging a revenue management culture across all areas of the business. Revenue management today involves sales, operations and events staff—and it’s creating more collaborative teams across those areas of the hotel.

“Revenue managers are creating more dynamic pricing for meetings and events spaces to really understand the best business mix for each hotel,” she continued. “Technology has really pioneered this trend and enabled event sales managers to be more confident using dynamic, demand-based, pricing. They are gaining insight and data to their group and catering business that can help them establish a concrete strategy for meetings and events space.” HB